Displaying Lab Prices on EHR Systems Cuts Costs

Evidence is mounting that when physicians know the laboratory costs of tests prior to ordering them, they show a decrease in ordering rates, and not only for high-cost tests.

A new study adds to a growing body of evidence suggesting the potential for significant healthcare cost reductions when physicians know the up-front cost of ordering routine lab tests.

The latest study involved 215 primary care physicians at Atrius Health, an alliance of six non-profit medical groups, and a home health and hospice agency in Massachusetts that uses an integrated electronic health record system. Physicians in an intervention group received real-time information on laboratory costs for 27 tests when they placed their electronic orders, while physicians in a control group did not.

Changes in the monthly laboratory ordering rate between the intervention and control groups were compared for 12 months before and six months after the intervention started. Six months after the intervention, all physicians taking part in the study were asked to assess their attitudes regarding costs and cost displays.

See Also: Residents Save $2M By Eliminating Needless Lab Tests

Lead researcher Thomas D. Sequist, MD, found a significant decrease in the ordering rates of both high and low cost range tests by physicians to whom the costs of the tests were displayed electronically in real-time. This included a significant relative decrease in ordering rates for four of the 21 lower cost laboratory tests, and one of six higher cost laboratory tests.

The results were published this month in the Journal of General Internal Medicine.

"What we are trying to do is promote value amongst our clinicians. We are not trying to cut back on needed healthcare, but we provide so much care to patients that [some] is actually not needed," Sequist says. "At the same time much of the care that is needed isn't getting provided for them. What we are really trying to do is have our doctors look through this lens of value."

Among 27 laboratory tests examined in the study, interventional physicians demonstrated a significant decrease in ordering rates compared to control physicians for five tests. This included a significant relative decrease in ordering rates for four of 21 lower cost laboratory tests and one of six higher cost laboratory tests. A majority of physicians reported that the intervention improved their knowledge of the relative costs of laboratory tests.

"What our survey showed is that most doctors are really interested and willing and engaged in the idea of how much things cost as part of an overall value equation for the care we are delivering, but they have no idea how much things cost and how they would start to bring those things into the decision-making process," Sequist said.

"Secondarily, if you showed them these real-time costs as a part of educating them, does it have an impact on their decision making process? We found in particular for things that are lower cost but higher volume are more discretionary in nature, so doctors may be ordering them more reflexively or feel like they are common things that all or many patients should have done. When you starting showing doctors the cost it may help them think a little more about the value of the tests, the combination of how much it costs and how much it is improving that patient's health outcome."

"Whereas when you look at the things that are less discretionary, the more expensive tests that get offered infrequently, when we showed the cost to doctors they tended to have less of an impact on utilization, probably because the doctor at the point of ordering a less frequent but more expensive test has probably thought a little more about the added value of the test and by the time they ordered it they really believed the patient needed to have it done."

See Also: When Physicians See Costs, They Act Like Consumers

Sequist's study adds to a growing body of evidence suggesting that significant savings can be achieved by eliminating needless lab tests. In October neurosurgery residents at the University of California San Francisco Medical Center demonstrated that a reduction by nearly 50% in the use of five common lab tests has no effect on patient care.

The reductions generated $1.7 million in savings for payers in fiscal 2011–12, and another $75,000 in decreased direct costs for the medical center, according to a study in Journal of Neurosurgery.

In the one year before the project, the residents identified 45,023 of tests for serum levels of total calcium, ionized calcium, chloride, magnesium, and phosphorus in the neurosurgical service. In fiscal year 2011–2012, this number was reduced 47% to 23,660. The residents' findings were part of an in-house initiative at UCSF that encourages clinicians to identify department-specific cost savings and quality improvements in care delivery.

In April, researchers at Johns Hopkins University School of Medicine reported in JAMA Internal Medicine that that when doctors are told the price of some diagnostic laboratory test as the tests are ordered, they respond like informed consumers and either order fewer tests or shop around for cheaper alternatives.

The Johns Hopkins study identified 62 diagnostic blood tests frequently ordered for patients at The Johns Hopkins Hospital. Researchers divided the tests into two groups and made sure prices were attached to one group from November 2009 to May 2010 at the time doctors ordered the lab tests.

They left out the pricing information for the other group over the same time period. When the researchers compared ordering rates to a six-month period a year earlier when no costs were displayed, they found a nearly 9% reduction in tests when the cost was revealed as well as a 6% increase in tests when no price was given. The net charge reduction was more than $400,000 over six months.